Topics such as abortion and obesity are increasingly being tabled for discussion by public companies, amid a recent rise in shareholder activism.
About 6% of annual general meetings faced protests this past year, according to Lumi, which helps companies host shareholder meetings.
Some five of 86 annual meetings that the firm worked on were gate-crashed by activists, director of shareholder engagement Kerry Leighton-Bailey told Proactive.
She explained that the “rise of shareholder resolutions” is a significant one, driven by campaign organisations such as ShareAction and Tulipshare leveraging “collective power” to make a change.
The typical retail investor now puts their money in companies “they feel passionate about”, she said.
In the current climate, many companies have tabled their position on Roe versus Wade for example, a pivotal abortion rights case in the United States that was overturned by the Supreme Court last month.
“They’re topics shareholders want to vote on,” said Leighton-Bailey, who added: “Pay is definitely one. ESG is definitely. We definitely see this question coming up more. It’s not just [from] employees. It’s normal shareholders.”
Younger investors participate more actively in shareholder meetings following the move towards virtual attendance and driving the changes.
US companies TJX Companies Inc (NYSE:TJX), Walmart Inc (NYSE:WMT) and Lowe's Companies, Inc. (NYSE:LOW) all voted on resolutions concerning reproductive rights this year, while the first-ever health-based shareholder resolution was filed at a FTSE100 company last year when Tesco PLC (LSE:TSCO) was called upon to set targets for healthy products.
Following pressure from ShareAction’s investor-led campaign on tackling childhood obesity, the resolution would have required Tesco to disclose its annual sales share of healthier products and lay out a plan to increase that amount by 2030 as well as publishing an annual progress report.
An Income Research + Management report observed in a report on shareholder engagement in March that: “Demographic changes, social protests, and updated attitudes towards social equity have promoted a renewed focus on diversity, equity and inclusion.”
Pay has also climbed to the top of the agenda for many shareholders, a trend that Leighton-Bailey said was not observed before April when UK inflation hit a high of 9%.
J Sainsbury PLC (LSE:SBRY) and Marks and Spencer Group PLC (LSE:MKS) both faced shareholder rebellion over top executive pay at thir latest AGMs.
Both supermarkets came under scrutiny over their chief executives’ pay packages though a resolution on whether Sainbury's should become an accredited living wage employer was voted down.
Whereas shareholder meetings were once the preserve of stuffy boardrooms and shareholders had to travel to a physical location to lodge their votes, since the pandemic a majority of annual meetings are now held virtually.
Almost two-thirds (65%) of AGMs in the first half of 2022 were virtual whereas online attendance was not previously permitted before the pandemic, according to data from Lumi.
More than a fifth of meetings (22%) were held through a mix of online and in-person attendance, and just 13% were in-room meetings.
The ease of access at shareholder meetings means there has been an increase in the number of shareholders attending every year, Leighton-Bailey said.
M&S said in its annual report that it boosted shareholder engagement by another 10% in 2021, after engagement rose from 561 at a physical meeting in 2019 to 1,664 last year.
The supermarket decided to permanently adopt virtual shareholder meetings due to these higher participation levels.
The rise in virtual meetings has also made it easier for young and engaged shareholders to submit questions by text, Leighton-Bailey said, making the topics for discussion less concerned with financial issues and more to do with social ones.
“Through the pandemic everything went online,” she said. “All these ends that shareholders wanted...have been swept away.”
Many organisations are now using hybrid or virtual meetings as a way to reduce the risk of shareholder protests, she added.
Lloyds Banking Group PLC (LSE:LLOY), for example, removed a shareholder from its meeting in May. It is now concerned about letting shareholders into in-room meetings, Leighton-Bailey said, seeking to move them online where cyber intervention is minimal.
Meanwhile, HSBC Holdings PLC (LSE:HSBA) had “airport security” at its latest AGM to prevent activists staging protests.
Many other companies are partnering investor relation teams with governance and legal staff to work with shareholders in advance of meetings rather than alienate them.
“We’re seeing the IR teams working with (governance, teams and legal staff) to overcome conflicts with investors before they reach critical mass,” said Leighton-Bailey.
She said more preparation than ever is going into shareholder meetings beforehand to ensure staff are well prepared if anything goes ‘off-script’.